‘Subdued exports due to global uncertainties’

KUCHING: Uncertainties in the global front could potentially be a drag on Malaysia’s trade performance in 2015.

AmResearch Sdn Bhd ( AmResearch) noted that in China, the manufacturing sector had contracted further to an 11month low in March.

The f lash HSBC/ Markit Purchasing Managers’ Index ( PMI) dipped to 49.2 in March.

Data so far in 2015 indicate that the new official growth target of seven per cent may already be at risk.

Slowdown in China would pose an adverse effect on Malaysia’s trades in 2015.

China was Malaysia’s biggest trading partner in 2014, contributing 14.7 per cent to total trade.

In te rms of ex por t s contribut ion, China had accounted for 12.1 per cent of total exports.

“Malaysia’s overall exports had contracted by 0.6 per cent on year to RM63.6 billion in January.

In particular, exports to China contracted by 22.7 per cent on year in January, while its contribution to Malaysia’s total exports dwindled to 10.1 per cent,” said the research house.

As a recap, Malaysia’s total trade grew 5.9 per cent to RM1.45 trillion in 2014.

Full-year exports expanded by 6.4 per cent to RM766.13 billion, boosted by increased demand for manufactured products.

Meanwhile, imports surged by 5.3 per cent to RM682.98 billion, driven by the increase in imports of consumption and intermediate goods.

Globally, demand for E& E had moderated during the start of 2015.

Based on the monthly report by the Semiconductor Industry Association (SIA), worldwide sales of semiconductors slowed to US$ 28.5 billion in January.

Malaysia’s overseas shipment of E& E had also registered a softer growth rate of six per cent in January.

According to International Trade and Industry Minister Datuk Seri Mustapa Mohamed, Malaysia’s exports of E& E will potentially be between four and five per cent in 2015.

Elsewhere, crude oil prices remain low amid weak demand in Asia and Europe and a boom in production in the US.

“As of year to date March 24, the WTI and Brent crude oil prices fell by 10.8 per cent and 3.9 per cent, respectively.

“We gat her that the contribution of Malaysia’s oil exports narrowed to 10.7 per cent of total exports in January.

“Also, the subdued Ringgit currency is likely to negatively affect the imports segment and overall trades in 2015.

Based on yesterday’s close, the Ringgit currency had depreciated by 4.8 per cent year to date to 3.666 against the Greenback.

“That said, the weak Ringgit currency is positive in terms of trade.

Despite the lacklustre exports, trade balance will likely retain surpluses in the coming months on the back of weak import orders.”